Dell board said to meet, vote on LBO

Bloomberg

Dell Inc’s board was planning to meet on Monday night to vote on an offer to take the company private for about US$24 billion, people with knowledge of the matter said.

The deal may be announced early this morning in the US, said the people, who asked not to be identified because the process is private. The offer values Dell at US$13.50 to US$13.75 a share, said two of the people. The Round Rock, Texas-based PC maker closed at US$13.27 on Monday, for a market value of about US$23 billion.

Silver Lake Management LLC will invest more than US$1 billion in the buyout and Microsoft Corp will invest about US$2 billion, one of the people said. Chief executive officer Michael Dell will contribute his 15.7 percent stake, valued at more than US$3.6 billion, and contribute US$700 million, this person said, giving him a majority stake in the company.

In addition to the equity and about US$15 billion in debt, the deal will include billions of dollars in cash from Dell including some from offshore accounts, one of these people said.

Dell is taking the PC maker private after a quarter century as a publicly traded company after struggling to keep pace with competitors such as Apple Inc in mobile electronics. It has also been slow to come to terms with the shift in business demand toward cloud computing, where storage and software are delivered at low cost over the Internet.

The transaction would be the largest technology leveraged buyout since the financial crisis, according to data compiled by Bloomberg. Going private may help the third-largest PC maker speed up attempts to revive growth and compete more effectively without the scrutiny of public investors.

The biggest technology leveraged buyout on record was KKR & Co’s purchase of payment processor First Data Corp for more than US$25 billion in 2007. A deal for Dell would probably be the largest purchase of a computer maker since at least 2002, when Hewlett-Packard Co bought Compaq Computer Corp for about US$19 billion.